Oil prices saw a pause in their rebound today after rallying around 3% in the previous session to their strongest levels in roughly four months.
Near-term supply fears still support the tone, but gains could be limited while the oversupply narrative remains a headwind over the long term.
Additionally, as the US moves to lift sanctions on the Venezuelan energy sector, the market could see a stronger potential for more volume, weighing on prices to a certain extent.
Disruptions from the cold weather in the US could continue to affect the market. Freezing conditions and storm damage forced temporary shut-ins and disrupted oil flows, tightening near-term supply expectations. Estimates suggest output losses reached up to 2 million barrels per day, or about 15% of total U.S. production, fuelling caution over availability over the next few sessions.
Additionally, production recovery in the Tengiz field in Kazakhstan could remain limited, leaving volumes below expectations. At the same time, caution could remain as geopolitical risks remain at the forefront, as concerns over an escalation in tensions in the Middle East remain present.
